June 2, 2004
Dear Friends in Christ:
Grace to you and peace from God the Father of our Lord Jesus Christ.
I have requested the privilege of this audience with you so that I may address a matter of financial urgency.
God has given this church the gift of money over which to exercise stewardship for the good of the whole community. God has given us community in Christ so that we may live as one body, each member caring for the welfare of the others. The Pension Plan of this church is the way such stewardship creates financial benefits for those who have been employed in positions of ministry and service. It is a shared responsibility.
At the present time, the ELCIC Pension Plan provides an annuity to about 600 retirees and their surviving spouses. When those annuities were established, a rate of 7% was guaranteed, based on the Plan's income. Due to changes in the investment market, the income of the plan has been reduced substantially and surpluses that were built up against such an eventuality have been exhausted. The Retiree Fund of the Pension Plan now has an unfunded liability.
The Pension Plan is administered on behalf of congregations by ELCIC Group Services Incorporated; GSI for short. GSI has implemented a plan to reduce and eliminate the unfunded liability. Currently, congregations and employers make regular pension contributions that include a 2% supplemental contribution. To date, GSI has directed the 2% supplemental contribution to offset the unfunded liability, but because of the rate at which the unfunded liability has grown, the 2% is not enough to keep up. The supplemental contribution, therefore, will be increased to 6% as of September 1, 2004.
In addition to this action, National Church Council has pledged, subject to Regulator approval, an immediate $2 million to begin the funding plan. These funds will provide bridge financing to get the funding plan started and cash flow support through the duration of the funding plan.
This is a long-term plan that recognizes it will take years to reduce and eliminate the unfunded liability. The funding plan will be reviewed annually and adjusted as necessary. National Church Council supports these actions and believes that GSI has developed a workable plan. Retirees can expect to continue receiving benefits at the current rate and those not yet retired will be unaffected by the unfunded liability because their accounts are held solely for their individual benefit.
I regret that this expense must be added to your congregation's budget, but, as I said at the beginning of this letter, Lutherans are committed in Christ to caring for each other. At the very least, it is our Christian obligation as a church community. GSI and National Church Council have considered a variety of options many times over and have concluded that this is the most reasonable and workable solution at this time. I pray that you will receive this decision with grace and support GSI in responding to this difficult time in our history.
Thank you for your partnership in the gospel and its mission. I am confident that a positive response to this setback, with integrity, will not weaken this church, but help us to discover how to be faithful in the hard times as well as the good.
Raymond L. Schultz, National Bishop
This letter was written to be read to ELCIC congregations on June 20, 2004.
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